While COVID-19 has had a devastating impact on many businesses around the world, it is the accelerated demand for others.
Even once a vaccine is secured and the need for lockdowns and social distancing ends, the world can look very different from what it was before the coronavirus hit.
With tech giants like Microsoft (NASDAQ 🙂 already making remote work a permanent option, many more companies are likely to follow.
A study by Georgia State University research professor Naveen Donthu and Anders Gustafsson, professor of marketing at BI's Norwegian Business School, says:
“Our lives, as people in a modern society, seem to be focused more on convenience than worrying about what might happen in the future. The guiding principle of our society seems to be efficiency and economic gain in place of safety. [O] When we get through this pandemic, we will emerge in a very different world than before the outbreak. "
When it comes to investing, Wall Street is always forward-looking. Here we'll look at exchange-traded funds on track to capitalize on a post-pandemic world:
ProShares MSCI Transformational Changes ETF
Current price: $ 39.06
52 Week Range: $ 36.84 – $ 40.30
Expense Ratio: 0.45%
The ProShares MSCI Transformational Changes ETF (NYSE :), a new fund launched October 16, provides exposure to companies that could benefit from pandemic-related advances in personal and professional life. Fund managers focus on four areas: Future of Work, Genomics & Telehealth, Digital Consumer and Food Revolution. Each theme has approximately an equal weight (or 25%) in the fund.
ANEW tracks the MSCI Global Transformational Changes Index. US-based companies make up approximately 77% of the fund. The rest are located in China, Switzerland, Germany and Japan, among others.
In terms of sector allocation, healthcare and information technology lead (more than 25% each), followed by communications services (19.49%) and materials (11.88%). ANEW has 143 companies, which means that no company alone has a weight large enough to make a significant price difference.
Tech giant Apple (NASDAQ 🙂 and computer software vendor Adobe (NASDAQ 🙂 top the list of companies in the ETF's Future of Work group.
Intuitive Surgical (NASDAQ 🙂 a maker of robotic surgery technologies and a global manufacturer of medical devices Medtronic (NYSE 🙂 have the highest weight in the Genomics & Telehealth group .
Among digital consumers, Japan-based Nintendo (OTC 🙂 a global heavyweight in the interactive entertainment industry, and the China-based e-commerce platform and cloud service provider Alibaba (NYSE 🙂 currently holds the first two places.
Finally, & # 39; the world's largest agricultural machinery manufacturer Deere (NYSE 🙂 and Swiss flavors and fragrances manufacturer Givaudan (OTC 🙂 leads the Food Revolution -group.
Since the fund started trading in mid-October, it is down about 5%. The underlying P / E and P / B ratios stand at 33.17 and 5.63 respectively.
While the fledgling ETF doesn't have an extensive trading history, we like the diversity of companies and the fact that technology giants don't dominate ANEW. The margin of safety will improve for long-term investors if there is a further drop to the $ 35 level.
An Opposite ETF Choice
In the post-COVID world, some industries currently struggling are likely to see a revival in demand. Those investors who wish to take a contrary approach can use the U.S. Global Jets ETF (NYSE :), which provides access to the global aviation industry and owns stocks of airlines and aircraft manufacturers. Since the start of the year, the fund is down 45% and shares closed at $ 17.19 on Wednesday.
Most airlines operate with limited capacity and international air travel is still quite limited. At many operators, annual sales fell by about 80%.
It will likely be years before voyage volumes return to pre-COVID-19 levels. Any long-term bet on the industry will likely require patience, but developments in the field of vaccines could help drive the recovery process of air travel and share of companies in the industry.
Bottom Line
2020 was dominated by the widespread impact of COVID-19. In addition to the two ETFs that could benefit once the pandemic dust settles, diversification can provide protection to any portfolio. Below are some more funds to consider:
Direxion Work From Home ETF (NYSE 🙂 – secured
Global X E-commerce ETF (NASDAQ 🙂 – covered
Invesco S&P SmallCap Consumer Discretionary ETF (NASDAQ 🙂
Invesco Dynamic Leisure and Entertainment ETF (NYSE 🙂 – covered
Vanguard Total Stock Market Index Fund ETF Shares (NYSE 🙂 – backed
